The Mercedes-Benz CLK 63 AMG is an impressive car, but at $200,000 it is rather out of my price range. But am I excluded from car ownership as a result? If you apply the logic of the National Union of Students, the answer to that question is yes. In response to the annual media kerfuffle over $100,000 and $200,000 university courses reported in each year’s Good Universities Guide, NUS issued a media release:
The National Union of Students called on the government to review its position on full fee paying places in order to provide opportunities to all students, regardless of whether they have wealthy families or are prepared to take up a $200,000 loan. National President, Mr Michael Nguyen said, “The prospect of going to university and graduating with a huge debt really makes it difficult for young people to be able to go to university unless they come from wealthy families.”
Of course, very few of the 663,000 Australians enrolled in Commonwealth-connnected higher education institutions last year were paying $200,000 or anything like it. Many of the most expensive courses are in fact double degrees which in practice cost less than the figure reported in the Good Universities Guide. When I have looked into this in the past the GUG assumes that people pay full-fees for both courses. However, as the full-fee ENTER for the more prestigious course is usually above the HECS ENTER for the less prestigious course, any students would pay full fees for one and HECS for the other. I haven’t had time to do more than quick check of this year’s GUG, but for Monash at least the same problem is there. Monash’s website states for Arts/Law:
This course is also available as a concurrent degree, where students can be enrolled in a full-fee paying place in Law, and a Commonwealth supported place in Arts.
According to the 2007 cut-offs published in The Age earlier this year, a full-fee Law degree had an ENTER of 94.5, while a HECS Arts degree had an ENTER of 86. So anyone qualifying for full-fee Law easily qualifies for a HECS place in Arts.
Also, people enrol in full-fee courses and then switch across to HECS places. According to an answer given in Parliament last year, 764 full-fee students in 2005 switched to a HECS place at the same institution (that includes the same course and other courses; it does not include people moving between universities).
We don’t have the 2006 data on fee-paying status yet, but in 2005 only 3% of Australian undergraduates were in full-fee courses at any price level. So the other 97% were in price-controlled, government-subsidised places. Contrary to NUS logic, having expensive courses on the market does not reduce the availability of cheap courses, any more than a $200,000 Mercedes puts a Toyota Corolla out of reach.
NUS isn’t the only organisation straining logic on full-fee courses. Labor is pledged to abolish them, so their position seems to be that though some individuals are able and willing to pay the full cost of their education – nearly two-thirds paid up-front in 2005, despite FEE-HELP loans being available – they should nevertheless be required to take a subsidy. Compulsory handouts to the rich!
That said, the full-fee places are a symptom of serious policy problems in higher education. The quota system of allocating HECS places by discipline to universities means that the supply of places is out of alignment with demand for places. Full-fee places, for which supply is controlled by the universities rather than the government, help alleviate this problem, albeit at considerable expense to the students involved. Universities like the full-fee places because the income for the fixed subsidy and price-controlled HECS places is out of alignment with costs, and so revenue from full-fee students is necessary to make up the shortfall.
A market system would let supply rise to demand and prices rise to costs. There may still be different prices for different students, but this is likely to reflect discounting for equity students or marketing strategies, rather than the huge price differences flowing from often trivial differences in Year 12 results that the current system produces.